Setting the U.S. Partner Stage for FY '08

Everywhere at Microsoft, people are busily laying goals and plans for
the company's fiscal year (FY) 2008, which starts July 1. The U.S. Partner
Group is no different. Robert Deshaies, vice president of Microsoft's
U.S. Partner Group, poked his head out from the middle of that process
to offer Redmond Channel Partner readers insights into some of
Redmond's priorities for 2008. Following are excerpts from Deshaies' comments
to RCP editors Scott Bekker and Anne Stuart after Deshaies' keynote
speech at RCP's recent inaugural TechPartner Conference in Orlando,
Fla.

On the U.S. Partner Group's priorities for 2008: At a high level,
we're in the early to middle part of our fiscal year 2008 planning process,
so I do want to make sure that we're clear on that. [The priorities to
follow] are just kind of off-the-cuff things that I'm 99 percent sure
will show up in our FY '08 priorities.

On helping partners connect to each other: One priority is the
partner-to-partner connections and really building out what that means.
Traditionally we've done this [by] connecting across certain partner types.
We've had these pilot programs going on that achieve a number of different
objectives based on more local needs. We will build out a program that
will be very consistent across the United States and that will open up
a broader community from a partner-to-partner perspective.

We're not only looking at a LAR or distributor connection to a VAR and
SI, but also [getting] ISVs into that marketplace and also [working with]
telcos and other non-traditional partnerships that we want to ensure happen.
Connecting to Web agencies is another potential opportunity that we can
see as we drive business forward. [We're working on] building out a rich
experience that will allow them to have an easier way to connect, an easier
way to set up relationships, because it's very expensive to set up and
manage, and then also [trying] to build out programs and things behind
that. So what we want to do is ... engineer out as much as we can, realizing
that there's still uniqueness to the relationships.

'Communication ... is
going to be a
continuing investment for us.
We've really worked
hard in the
last six to nine
months in [figuring
out] how we can better
communicate out with a broader
set of partners.' --Robert Deshaies, Vice President,
Microsoft U.S. Partner Group

On partner readiness: Readiness will continue to be [key], as
you would imagine with the next wave of products coming out. We have a
significant number of products across lots of different competencies,
where we need to make sure from a readiness standpoint that we're doing
a great job for our partners. That means not only at a technical level,
but also [in terms of] sales, marketing and competitive readiness and
enablement. We also need to make sure that we're not only developing and
delivering, but that we're doing a really good job at landing the content
so it's being used.

We're ensuring that partners at every level are understanding where this
[content] is, how they can access it, how they incorporate it into their
readiness planning and enablement, so that they in turn can deliver the
experiences to customers that they need to. That to me is as important
as the content that we're putting together -- making sure that it lands
and sticks and that we've got everybody using it.

The challenge you hear when we're in these different settings is we have,
typically, a room where half of the people aren't accessing material ....
Either they don't know how, or they haven't taken the time because past
experiences have led them to believe that maybe it's not worth it. The
equation's changed over the last few years. It gets richer and richer,
so we need to make sure that [partners access the materials]."

On overhauling Microsoft's communications with partners: Communication
as part of [readiness] efforts is going to be a continuing investment
for us. We've really worked hard in the last six to nine months in [figuring
out] how we can better communicate out with a broader set of partners.
What we're doing is connecting the communication engines from the local
area districts to the regions to national. We're evolving our engines
internally, and those connect into the worldwide engines, ultimately.
From the U.S. perspective, we're ensuring that we have all of these local
efforts leveraging through the engines so that we're continuing to provide
[a] consistent look, feel and engagement strategy around those communications
across the entire United States and so that we're able to leverage a series
of best practices from area to area and consolidate and make sure that
those all happen consistently across the United States. We're also working
to become more and more and more personalized.

On licensing: From a licensing point of view, we're going to continue
to look at how we can drive more Open business for customers with fewer
than 250 seats. There's a significant opportunity in the small and medium
business today that is very well served by our Open Licensing products,
including Open Value, which has a lot of advantages. We're going to work
very closely with partners on all different fronts. But companies from
ISVs to VARs to our breadth SIs to our distributors and even our Large
Account Resellers are looking at building business around the Open business.
It's a huge opportunity, so we're going to look to grow that business
quite a bit.

"The other side of that equation is, there's some unique opportunities
that we'll continue to drive in what I'll say is the core midmarket and
up -- 250 seats to 1,000 seats. We see an Enterprise Agreement [EA] and
Select opportunity. So there are a lot of customers in those spaces [that]
have a series of different agreements -- they could be Open, they could
be Select. They actually are missing out on some great opportunities in
our EA program. As part of our getting really smart about our targeting
and the investments we made in our systems, we're able to identify who
those potential customers are and how we can go out and help them understand
why the EA is a much better investment for their companies. Many times,
[doing that] will put much less money in our pocket short term, but it
really gets customers on a program that's better for their business and
[strengthens the] long-term relationship, which is really what we're after.
We want to make sure that we have investment from them long-term, not
just a one-time hit. So we'll be putting some focus and time there as
well. Right now, across midmarket, we're about 12 percent penetrated with
EAs. We'll look to increase that because we believe there's good opportunity
for those customers.

On Microsoft's incubation business: Another area that we'll be
focusing on for FY '08, and we'll expand upon more later as we get through
our FY '08 planning, is our incubation businesses. That's around UnifiedCommunications,
security, CRM and Dynamics ERP. And, of course, our server business, although
that's not incubation like the other ones are. We've got lots of launch
activity happening around our server business that we'll be driving pretty
hard for this coming year.

On Microsoft's Worldwide Partner Conference, to be held July 10-12
in Denver: There's going to be discussion about the continued evolution
of the Microsoft Partner Program, which will actually be a big one for
everybody.

[There will be details on] Software Plus Service, [Microsoft's blended
delivery strategy for Software as a Service]. There will be, of course,
a lot of information around all of the releases. Over a 12- to 18-month
period, I think we have no less than 12 product releases happening. That's
a really big deal associated not just with products going to market. [There
are a lot] of things around readiness and sales and marketing, [that]
we're going to be doing as a company from a branding and marketing standpoint
all the way down to 'through partner' and 'with partner.' All of that's
going to be updated, and there's going to be a whole new resurgence of
that around all the different competencies and the products.

And we will not forget about Vista/Office. You're going to see continued
play and ramp of that, because these are all things where there's a connectedness
to this whole 'People Ready' concept. We're at a point now where people
will grasp on to this concept. I think it's been a little harder for them
because we haven't really delivered on the full experience from a [solutions]
standpoint. But as we move through this next wave of products coming out,
and they see more of what we're trying to convey in that message, it will
start to stick.

Online exclusive excertps from RCPmag's interview with Microsoft Vice
President of the U.S. Partner Group Robert Deshaies.

On the uptake of the current wave of Microsoft products such as Windows
Vista, 2007 Microsoft Office System, Exchange Server 2007 and Microsoft
Office SharePoint Server 2007:
Everything is actually moving very, very quickly. We're just at different
stages in terms of when things were actually released and how they fit
into different lifecycles in working with all the different partners that
we have.

I actually feel that kind of a commitment to the company standpoint by
all the different groups, that we're delivering on the expectations of
the company overall.

When I use the word surprise on the [Windows Vista] premium SKUs [in
Deshaies keynote at the Redmond Media Group's TechPartner conference on
March 28], it wasn't a "Wow, we're totally surprised." It was
that we planned conservatively around adoption of the premium SKUs and
because we had done something different this go-around. As we were developing
the premium SKUs, we took a really conscious effort of trying to work
with customers and partners to drive the right value-add in the premium
SKUs, better than we ever have before.

As we did this, and we took a slightly different approach from the product
standpoint, we had hopes and then there was forecast. The good news is
that we actually are exceeding forecast on the premium SKUs because the
connection to the effort was actually being realized. That's a good thing.

What's happening is that people are looking at the different views and,
whether it's consumer or business, they're finding that there's something
different in these premium SKUs for everybody, whether it's a security
play, whether it's an enterprise feature play, whether it's a technology
play for the early adopter.

On the scope of the Partner Advisory Council for Live Services:
At the [2006 Microsoft Worldwide] Partner Conference, [Microsoft CEO]
Steve [Ballmer] announced the PAC for Live Services. The PAC for Live
Services isn't just about Live Services, it's really looking at Live Services
as a component of managed services. Managed services is broader and can
be done a number of ways, it's not just a certain type of delivery. It
can be delivered on-premise, it can be delivered hosted, it can be delivered
live in the clouds, really Software as a Service, as hosted services and
so on. Managed services covers all of those.

On Microsoft's plans for partners around managed services:
As we look at [managed services], we know that we need to evolve a holistic
vision and program to address all of those different needs of a customer
and how we work with partners across that stream, because there's an economic
impact as well to partners. And so, as part of the way that we look at
this it's not just about, "OK, here's a program. This will solve the licensing
needs of a customer." What we need to also look at as part of the experience
is, how do we help partners bridge from a profitability-of-their-business
standpoint, the move from this on-premise experience and the way that
they drive services to these other economic models which are dealing with
hosted. Because hosted is very different from the services that they do,
and then when you talk Live Services you talk about a whole other economic
model. We're trying to figure out as part of this and working with partners
to do this is how do we kind of "cross the chasm," to steal
a Geoffrey Moore term. [Crossing
the Chasm is the title of Moore's 1991 classic book on marketing
and selling high-tech products to mainstream customers.]

That's a key thing for us that we're really trying to pay close
attention to. The [Microsoft] executive leadership team is very sensitive
to the impact that these models have on partners, so we're trying our
best to figure out how we can get from here to there and do it in a way
that partners can still remain profitable but also [makes sense from a
business standpoint for Microsoft]. We're trying to find that balance
in the equation. I don't have the answer to sit here and tell you what
it is yet. All I can tell you is that we're working very hard around this
whole managed services opportunity with partners and customers to try
and figure out what that looks like. I don't think anybody's solved it,
to be quite honest.

Robert's business bookshelf:
Geoffrey Moore is one of my favorite writers. I don't have a favorite
book or a favorite author. I just am a fan of books that deal with innovation
and evolution and leadership.